Xbox Q1 Losses Up From Last Year

[cthellis42]

Apologies on the delay, but I figured I was going to have to argue a lot in the point-by-point breakdown, but as it turns out that didn't have anything to do with what I was saying anyway.

 

[Qroach]

The marketing, of course, certainly not restricted to TV ads. Considering the posters that are plastered across the front of almost every game store, they're just concentrating the way most game companies to--specifically targetting the audience. Attractive games get them to but the box, and where else do they go to get the games? Hehe...

Oh I have no doubt that a lot of cash is goign to marketing. However the most expensive form of marketing is television generally, but anyway, it's all a moot point.

Indeed, but none of us know what they've spent nor how they're continuing to spend, and no one is claiming to know exact figures right now. The only thing we've got are "announced intentions" and our own hypotheses.

Exactly, but one can look at the features an how xbox live is implemented to come up with a good estimation on what they probably spent.

Maybe, but MS also knows that the only way to GET their installed base higher is to not back down from their plans--perhaps kick them up a few notches since the "online revolution" doesn't seem to be picking up steam too quickly.

Correct, they'll go forth with advertsiing and things like that but I simply don't see them spending 40-50 per user when they know (and they have a very good idea ) how many xbox users actually have broadband.

Obviously if the sales are slower the hardware costs from the setup packages are less, but how much will anything else be? I imagine they will continue pushing hard and offering incentives to developers-- as well as donating dev time to help--and making sure all the servers for all the games are set up and ready FOR people regardless. I don't think bandwidth costs will be at the forefront.

That's just the thing, MS isn't really offerring any incentives to developers, other than some statistics that show games wiht xbox live support sell very well to that population. The help they provide is extremly minimal, no more than they provide for any other games in development. Xbox live support is completely tied into regular developer support. Suprisingly Xbox live is easy to implement and pretty straight forward so most of the time there' no real need to assist the developers with lots of help.

Regarding Database and user info servers, MS set's those up ahead of time since they only release as many xbox live kits as the database servers can support.

No one has claimed that, and it's been clarified since page one. Cyba thinks they may well have spent a majority of it already (which could be anywhere between $501m and the full amount), or at least "could see" it. THIS is certainly a dead horse that should stop being beaten.

That's fine, we'll have to agree to disagree. If you ask me cyba changed his story. When someone says to me "investments" it looks like they either plan on investing tha tmuch or it's past tense in that they alredy spent a billion on it. I don't think that's true, specifically after seeing just what is implemented in xbox live and looking beyond the PR.

Since no reports specified this, we don't really KNOW that "joins" is any qualification whatsoever.

Well look at it this way. If microsoft releases specific numbers of xbox live kits and 2 month trials into the market place, then they know that the exact number of users the hardware and software behind live can support. Once all those kits and trials are in the retail channel, they are considered sold (as in sold to retail) One way or the other, they will get sold overtime. It wouldn't make sense to spend money beyon tha tuntil you've sold enough subsciptions.

Now explain this to me, why would anyone spend additional money (and I'm not talking about advertising) on the rest of the userbase when MS knows exactly how many users can join the service? Think about this logically and I'm sure you'd agree that it wouldn't make sense to spend money expanding the service when you haven't sold all the units in retail.

It's not like the moment a new Live user logs on MS goes "whelp, time to spend another $40-50 dollars on him!" It all depends where the costs are.

Exactly! They spend the money up front after manufacuring a specific number of xbox live kits and trials. The thing is they only release a few hundred thousand kits and trials at time. The XBox live costs come form adding and mainting database servers and the minimal bandwidth used to connect users to the service.

You're actually the only one to use "fact" in your commentary: Xbox live didn't cost a billion dollars to create, setup or operate, get your facts straight. And your fixation on this is going nowhere, since all this was clarified since page one. Cyba indeed restated that the investments were over fives years and that he thought it likely that the bulk has already been spent at this point. You can argue figures and likelihood, but no one has been arguing facts or specifics, though you have used the term to denegrate opinions.

Ok for one thing I think you're quite a bit out of line here. First arguing on behalf of cybermec and then putting words in my mouth! I didn't STATE it was a FACT that live didn't cost a billion dollars. Those were two different statments. The first one was that xbox live didn't cost a billion doallrs to create setup or operate up until this point (that was my opinion as I've stated numerous times in this thread.) and the second statement was for him to get his facts straight beuace MS said 2 billion over 5 years on xbox AND xbox live. This is the last time I'm going to say this, as I don't think you read my statment correctly at all.

Cybermerc wrote:

The investments have been massive (1+ billion) but consumers haven't shown much interest. The revenue is not worth talking about and I doubt they were making much on the initial Live Kits.

and

It's a 5 year investment of which the bulk has likely already been spent. No money to be made on that for a long time.

I find it funny how your chastising me for what I wrote (which I've clarified as my Opinon), where as cybermerc, the person you are arguing for, clearly made a NUMBER of statments wihtout knowing the actual truth or even saying it's just his opinion. Despite his more recent clarifications, perhaps you should direct your "factless anger towards the both of us or none at all!

This is the kicker, and I hope the LAST TIME we see this bandied about: he has not. Neither stated it as known fact, nor said for Xbox alone. If you want to apply his BULK comment on his OPINION to the $2 billion figure, then that applies to more than Live as has been already shown.

Like I said, I didn't claim that I KNEW the facts, I only told him to get his facts straight due to what he claimed.

So then doesn't that make it LESS like a MMORPG since they DO run on tons of servers for their game?

Like I said before, to the end users it's essentially the same thing as a MMORPG. The main reason I compared it to an MMORPG, is to show how games like everquest and it's 250,000-300,000 users has more to it's creation and service then something like Xbox live does, and i can certianly make an educated guess that all the years of Sony runing everquest, they haven't spent a billion dollars on it's creation and operation.

...while Microsoft has been trying to meld an entire industry of developers to its plans, not to mention specific designs and quality demands. And I rather doubt MS wants to build a system that would have the continuing bandwidth demands, support costs, and developmental upkeep as a MMORPG does.

There you go again with comments like "meld an industry of developers to it's plans" I still fail to understand what you mean by that, because that's not what they do for the development community. They provide a toolset (Xbox live) and support for that toolset. They may advertise to gamers that xbox live is the biggest thing since slice bread, but they don't go around throwing out incentives to developers for supporting it.

And I rather doubt MS wants to build a system that would have the continuing bandwidth demands, support costs, and developmental upkeep as a MMORPG does.

Ah, then so we do AGREE! So if MS wouldn't want to build a system that had the continuing bandwidth demands, support costs, and developmental upkeep as a MMORPG does, they how could they ANYONE think that MS has spent a large portion of 2 billion dollars on even a billion dollars until this point? It just doesn't sound reasonable when compared to MMORPG's that require much more hardware, software and upkeep.

I've already said that "invest" means many different things, and since we don't know what costs they actually have involved and all pretty much KNOW that their running costs are more forgiving than other online games that charge monthlies, from what WERE they establishing that $1 billion figure from in the first place? And though personally I think we're behind their expected rates, we won't know until June 2004 how it lines up with their predictions (1 million subscribers), and though I don't think they'll get anywhere near their predicted 10 million by 2007, we are still not too far from their running charts so far. (Except for their service price, of course.)

That's correct...

And since we all agree that bandwidth and running charges shouldn't be too cumbersome at all, and not out of line for developers/companies who provide it freely, then obviously to state ANYTHING CLOSE to the amount they have, there are many more logistics involved having nothing to do with their active subscribers' needs.

Well Like I said before, MS never actually stated they would spend a single billion or around that number on xbox live. They only stated (in a press release that they planned to spend 2 billion on Xbox live, Xbox, R&D for xbox 2, game software and support for developers over the course of the 5 years.

Here's the article that is referenced from the new york times.

http://query.nytimes.com/gst/abstract.html?res=F00E14F93F5C0C738EDDAC0894DA404482

I paid for the article so I could clearly see what it said, and there's nothing in there that quots a press release, a microsoft executive, or even rueters saying MS are spending a billion plus on live or any specific doallar amount. In the article they don't actually state that microsoft has said they plan to spend 1 billion on live. The article only suggests that xbox live is a billion dollar + gamble.

So, when you look at the bigger picture and all the things MS is actually spending that 2 billion on (Xbox live, Xbox, R&D for xbox 2, game software and support for developers over the course of the 5 years) it doesn't sound so unreasonable.

 

[Magnum PI]

waow, you did just break the beyond3d record of the longest post..

i saw you were training for a while

 

[cthellis42]

Ok for one thing I think you're quite a bit out of line here. First arguing on behalf of cybermec and then putting words in my mouth!

Hey, we're only tossing around one word here, and I haven't put it in anyone's mouths as is HAS been brought up by many parties so far. I'm not claiming you have a whole ton that PROVE your opinion, but you are still harping on this matter the whole time, while it's been established since the first page that we're ALL talking about posted numbers and hypotheses.

"This is the last time I'm going to say this," but when you use phrases like it's starting to look unlikely and I doubt and likely you are by NATURE "saying it's just your opinion." MOST things around here are by nature "just our opinions" includings things mentioned as pure fact (like, say, chip/system specs) because they could still be remembered improperly. If someone lays out a ton of info I don't know offhand, I may well accept as fact. If they're corrected by another on a detail and a few more people concur, I'm likely to adjust my acceptance (and probably they as well, as those matters are much more clear-cut to show). Sometimes the other end up being corrected by yet ANOTHER person who had much more in-depth access, to boot. They didn't preface anything with "in my opinion" and no one thought they were lying outright or "obscuring facts with insidious design," but there it is. Meanwhile, in your overwhelming desire to continue to attack cyba, even in the two quotes you hope are "dooming" you latch onto a term which has multiple meanings, and are worded in ways that imply "opinion" by their nature. I'll be the first to admit cyba usually comes from the "high side" of matters and talks down to those he disagrees with (especially those he's more vehement with--i.e. you ), but you're getting nowhere with this particular gripe.

So if MS wouldn't want to build a system that had the continuing bandwidth demands, support costs, and developmental upkeep as a MMORPG does, they how could they ANYONE think that MS has spent a large portion of 2 billion dollars on even a billion dollars until this point?

Well don't look at ME, but it certainly seems like a lot of people do. There's contention over the exact amount from the press releases, and though I can't find the exact words Microsoft stated nor the Reuters report anymore, there's certainly much consensus that it's ~$1 billion. The wording has led some to report "around" and some to report "over" and some just saying Live will account for much of the $2 billion figure and letting us guess, but with so many sources from so many different angles saying the same thing, I'd imagine there's more to it than "they're all just guessing." Heck, we even have outside analysts and not press at all saying they "estimate that building the global network for Xbox Live will account for at least a quarter of the $2 billion Microsoft has said it intends to spend to establish its video game console." Sounds like they're ONLY talking about hardware and continuing maintainanace costs, too, as one would stretch to say marketing and surplus costs are part of "building the global network."

How could ANYONE...? Seems like a ton of people are assuming big, big costs. <shrugs> MS's own reports lead them to believe it (and they've never issued corrections), and it seems like separate analysts have their own ideas which are still in the stratosphere.

There you go again with comments like "meld an industry of developers to it's plans" I still fail to understand what you mean by that, because that's not what they do for the development community.

Offhand, I imagine we "know what they do" precisely as we know "exactly what they spend" on it. Pushing developers tends to cost money, and not only does Microsoft want them to adopt Live in any way they can, but they also want to force standards on them: features, particular quality levels, guaranteed support... EA choked on that, so obviously there are DISincentives to the matter. EA is plenty big enough to scoff at Microsoft and do what they want, however. PC developers are used to this kind of operation, but others are not, necessarily. Heck, they might well need assistance towards picking it up--and MS wants everyone on board who is willing. Considering there are DISincentives (especially since online consolling is in slow adoption, and developers for major games were likely gotten on board before Live even existed and they could start measuring any adoption rates) and MS wants to push the service hard even to developers who are hesitant to care about online offerings, think any extra sales would cover continuing support costs, or may even require assistance in it, I'm forced to assume MS provides some INcentives to counterbalance. (Meanwhile, none of us can speak for a broad swath of gaming developers, nor know what might go on and never filter down from upper management.)

The article only suggests that xbox live is a billion dollar + gamble.[/url]

Of course you're not "gambling" what you're not spending. I'm still unsure of the source people are using--I think many are basing off Microsoft "pre-announcements" and to some Xbox webcasts they hosted around that time. But whatever Microsoft DID say, they certainly WANTED people to know they were investing heavily in Xbox itself and especially Xbox Live. And absolutely no one thus far has gone under $500 million just for Live, which is STILL far over what you're still trying to portray. And many different sites from many different angles are coming to that range on their own--not from any central article. (In fact, there are too many using "$2 billion" and "much of that" regarding Live that there's a high likelihood those words were in MS's announcement.)

The main reason I compared it to an MMORPG, is to show how games like everquest and it's 250,000-300,000 users has more to it's creation and service then something like Xbox live does,[/qroach]

I certainly won't agree on the "creation" part, and after thinking about it I'm starting to disagree on the "service" part as well. They are differently-natured, and though there are many parts where Live will cost much less, there are also many more things it aspires to that MMORPGs barely touch upon. MMORPGs have just now started to touch upon beaking language borders in other than minimal ways, while Live has been pushing to global scale since phase one, and wants speed, service and support to match. MMORPGs shrug off anything ISP-related as out of their hands, while Microsoft undoubtedly wants to work with all the major ISPs in their markets to make sure Live is up to quality standards. MMORPGs compete against each other and have nearly universal levels of cost and support, while Live is stacked up against a larger, free opponent and gamers that are primarily playing for free on PC as well, so not only do they have to "balance" themselves to a zero-sum, but they have to press harder to develop Live features to make it stand out to JUSTIFY people subscribing to them. MMORPGs don't really have to bother with relations to anyone but themselves and their community, while Live strives to increase relationships and acceptance and support to every developer it can in every market it wants to enter.

In all, I'm just forced to believe there is FAR more "cost" involved on a myriad of different levels than just hooking up connection servers, paying bandwidth, and routing support calls through pre-existant channels.

 

[Johnny Awesome]

I hate to be crass and boil this down to its essence, but only a fool would believe that MS spent more than $200 million on Xbox Live thusfar. It's probably closer to $100 million. A 500k userbase at $10 per month has to support EQ and still make money - ie. $60 million. I could believe that MS spent $100 million more than that on technical research, dev kits materials, and marketing, but that's about it.

Forget trying to decrypt hype-releases from the net and let's use our brains for once.

 

[cthellis42]

That hasn't been the question for quite some time, Johnny. It's viability as a service is in knowing how much they WILL spend by 1H 2007 and how much they will have made on it until that point. Analysis on that is highly subjective.